While results were announced earlier this year, this report goes into more detail regarding the issues affecting the company. The report is available in full from the Nasdaq Web site, which celebrated Apple's twenty-year existence on its stock market yesterday.
Apple is legally required to file such a report each year by the US Securities and Exchange Commission (SEC). The reports must be filed within 90 days of the financial year's end.
Faster chips On the current megahertz gap, the report says: "The company has been informed by its suppliers that faster microprocessors will be available in sufficient quantity beginning in the first half of 2001.
"However, no assurance can be given that such faster microprocessors will actually be available, or be available in sufficient quantities, and the inability of the company to obtain faster microprocessors in sufficient quantities during 2001 may have an adverse impact on the company's results of operations and financial conditions."
OS X gamble Apple's report also reveals the risk it is taking launching Mac OS X if the release is delayed, lacks third-party support or, worse still, is not accepted by Apple's customers. This could seriously affect Apple's business, the report says.
Apple's financial team is led by executive vice president and chief financial officer, Fred Anderson, whose salary rose by $55,145 to $660,414 in 2000, the report shows. The team's analysts said: "Though fourth-quarter Power Mac unit sales were close to expectations, Apple experienced an unanticipated shift towards lower priced Power Mac configurations, resulting in lower than anticipated net sales for the quarter of approximately $30 million." This revelation shows Mac-customers exercising the choice to buy slower pro machines, in preference to number-crunching multi-processing Power Macs.
The financial team also warns of a "significant sequential decline" in quarterly sales during the first quarter of fiscal 2001. It expects first quarter net sales to fall to £1 billion, as the company faces reduced demand, and exercises its responsibility to pay out rebates. The company hopes to reduce inventories, and will also have to pay $115 million in cancellation charges relating to "purchase orders for proprietary components due to reduced sales".
Sales slow down The report claims: "For all of 2001, the company anticipates net sales will decline as compared to 2000, falling in the range of $6.0 billion to $6.5 billion. The company expects it will be profitable, before the effect of any investment gains, during each of the last three-quarters of 2001."
The analysts are betting on this, because: "Apple generally sells more products during the third month of each quarter than in either of the first two months".
Apple also paid out $5 million in severance payments to approximately 95 employees as it consolidated its international- and domestic-sales and marketing teams.
Product launches Apple will be launching a new OS and new products – rumours exist of a music application. Despite this, the report warns: "The success of new product introductions is dependent on a number of factors, including market acceptance, the company's ability to manage the risks associated with product transitions, the availability of application software for new products, the effective management of inventory levels in line with anticipated product demand, the availability of products in appropriate quantities to meet anticipated demand, and the risk that new products may have quality or other defects in the early stages of introduction."
The company also predicts a price war in the personal-computer industry, as manufacturers aggressively reduce prices, and warns against the negative effects of fluctuating exchange rates – particularly on PC manufacturers trying to slash their margins to stimulate demand in a depressed market.
A host of other facts and figures also appear in the closely worded, 51-page report. These include figures that show the company increasing its net sales (over 1999) by 30 per cent, enjoying a 32 per cent rise in Macintosh unit sales.